A Persian Cafe, Edward Lord Weeks

Thursday, 6 February 2014

A Pointless Dispute

Chris House, an economics professor at the University of Michigan and a blogger, writes a piece responding to Paul Krugman's occasional claims that "the facts have a well-known liberal bias", suggesting that it is more nuanced and that, in general within the sphere of economics, they have if anything a conservative bias.

Noah Smith, a colleague of House's and quite a famous blogger (as economics bloggers go), responds to this. He argues that the positions supported by the facts - which he agrees are broadly the same set of facts that House suggested they were - are in fact more centre-left positions.

Note that they have little to no disagreement over the economic facts or the policies implied by the facts - it's simply a he-said, she-said debate over which ideology actually advocates those positions. Frankly, this kind of argument is a waste of the time of intelligent people who could be doing far better things.

Out of interest, who do I think best represents these facts? The professors/bloggers agree that:

taxing labour income reduces the supply of labour (a bit)

extending unemployment benefits encourages people to delay looking for a job (a bit)

taxation can reduce unemployment demand

excessive regulation seems to be correlated with reduced levels of business formation

union concentration has a detrimental effect on industries

an increased minimum wage will, to some extent, reduce employment

It's not really fair to put all leftists in the same category. So I'll say that honest leftists - generally in academia - tend to admit all of these, though in most cases grudgingly. Mainstream leftists - politicians, journalists and the great unwashed - in my experience are happy to deny all of these except the third. Perhaps too many of the leftists I know are Marxists and/or angry teenagers ("So you think more benefits makes people stay out of work? Why don't YOU try living on £50 a week?") but, at least as far as economics is concerned, I would happily describe the average leftist as an imbecile.

That said, rightists aren't necessarily better. Smith's charge is that, while all of the statements above (that is, bullet-pointed, not my diatribe) are true, people on the right exaggerate the strength of these effects and ignore the strides which have been made towards laissez-faire in recent decades, reducing the marginal social costs of these interventions.

Certainly there is exaggeration on the right, but I think there's less of it. Partly this is that I don't agree that all of these effects are small - in particular, excessive regulation has made the US about 75% worse off over the last 65 years - but Smith is a professor while I am a mere undergrad, so for the greater part I shall bow to his greater expertise. Perhaps it's also that I live in the UK, where the monopolist news provider is state-owned and is generally agreed to be left-wing (the deniers of this generally being of the far-left; the BBC, being firmly of the centre-left treats the far-left with more contempt than it does the centre-right). (NB. I'm probably suffering from Hostile Media Perception to at least some extent, I don't know how much to adjust for this or I would do so).

But the impression I get is that, for all the faults of the right, and there are many - science denial, protectionism, and paranoia in particular - they tend to be less stupid than the left in matters economic, and by a noticeable margin.